1. Field of the Invention
The present invention is generally directed to a method and system for securing a third-party payment electronic transaction. More specifically, the present invention is directed to a method and system for providing for the integrity of electronic transactions between at least a customer, a payor, and a payee or vendor.
2. Description of the Related Art
In many financial or consumer transactions, it is increasingly necessary to provide security and to ensure that transactions are bona fide and properly authorized. There are many benefits to using third party payment devices, such as credit cards, for transactions; however, there are many shortcomings, dangers, and additional liability exposures to the parties involved, including: a payor or financial institution (used interchangeably herein), a vendor, seller, giftee, merchant, or payee (used interchangeably herein), and a customer, purchaser, beneficiary, or buyer (used interchangeably herein).
Conventionally, a buyer would seek to use cash, check, a credit card, or other third party payment device with a vendor or merchant to make a purchase. In the case of a credit card, a buyer is presented with a receipt, invoice, or check (used interchangeably herein) and the buyer generally signs the receipt, potentially adding a tip. Once the receipt has been signed, a vendor or merchant submits the receipt or purchase amount to a payor or financial institution. One of the vulnerabilities in that case is that the buyer must rely on the honesty and integrity of the vendor that the amount submitted to the payor is indeed the amount that the buyer has approved. However, this may not be the case. The vendor or merchant may instead specify an incorrect amount either intentionally or accidentally.
For example, while the buyer might have agreed to a $50.00 purchase price, either through error, or deceptive intent, a vendor may submit a bill for $500.00 or even $5,000.00 to a payor or financial institution. The buyer may never notice this unless they vigilantly inspect their periodic statements. Even if the buyer does notice the discrepancy, the buyer may still be exposed to over-limit charges, accrued interest, penalties for other transactions refused due to the unintended transaction, a reduced credit score, and many other negative consequences.
In some transactions, such as on-line purchases or telephone purchases, a credit card is not even seen by a merchant or vendor and, in some instances, merely the credit card number is provided. Therefore, anyone who comes across a credit card number could potentially use the credit card to purchase anything up to the creditor's purchase limit. In such a transaction, there is the enhanced possibility of fraud by the purchaser and/or the vendor.
Fraud or overcharges are even possible in an instance where the physical card is presented, for example: where a purchaser or buyer may go out to dinner and specify a tip in a certain amount to the waiter. Such a waiter or waitress is free to later modify the specified tip amount and submit that to the payor or financial institution in whatever amount they desire. This kind of fraud and abuse is virtually unchecked—requiring pro-active scrutiny and diligence on the part of the buyer.
Countless such nefarious frauds and abuses are possible in the conventional credit card transaction paradigm, limited only by the ingenuity of the fraudulent party. In the past, there have been many ineffective attempts to make credit card transactions more secure.
Card issuers have printed cards with ultraviolet-only ink and added card verification codes, which take the form of additional digits that are not embossed or raised from the card surface but are only visible to a holder of the card. Another method of securing cards has been to require the input of a billing zip code or a pin code. A more basic security measure has been requiring the signature of a cardholder when using the card.
However, neither these nor any other measures heretofore known provide sufficient security to a purchaser. Once a cardholder has given his credit card number and expiration date to a merchant, the merchant is afforded ample opportunity to charge any amount up to the credit limit of the card and the purchaser may not discover this at all unless they thoroughly inspect their statement from the credit card company and they happen to notice a discrepancy. There simply is no readily available means for a purchaser to specify an amount and lock that amount in such that a merchant or vendor is unable to tamper with the amount. Still further, anyone who gains possession of a purchaser's credit card may, for the most part, freely use that credit card number to make fraudulent purchases. There is therefore a need for a method and system for securing a third-party payment electronic transaction.